Average mortgage rates have hit the 6% mark, piling more pressure on millions of families. Figures from industry experts Moneyfacts have confirmed that a typical five-year fixed rate residential home loan has edged up from 5.98% at the end of last week, and the highest since late September 2023. The average two-year fixed-rate homeowner mortgage on the market is sitting just below 6%.
Sub-5% deals vanish
Fixed mortgage rates have been edging up in recent weeks amid rises in swap rates, which are used by lenders to price mortgages. The increase has been fuelled by expectations that the Bank of England's base rate could not only stay higher for longer but could also rise to keep a lid on inflation.
Moneyfactscompare.co.uk also said that the choice of sub-5% rate fixed mortgage deals has plunged from 1,494 since the start of September to just nine on Monday morning. This figure excludes deals that are exclusive to Northern Ireland lending only, it said.
Industry reaction
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: "The past few weeks have seen pricing margins among major lenders come under immediate pressure from renewed swap rate volatility."
"As wholesale funding costs climb on the back of rising gilt yields, fixed rate adjustments are somewhat inevitable. The impact on sub-5% fixed mortgages has been brutal, with around 1,500 deals priced below 5% vanishing since the start of September while average five-year fixed rate has reached 6%, with the average two year not far behind. Average fixed mortgage rates have not been above 6% for around three years."
Ian Harris, president of NAEA (National Association of Estate Agents) Propertymark, said: "We are seeing first hand how sensitive buyers are to mortgage rates, and the rapid disappearance of sub-5% deals will inevitably add further pressure to affordability."
"For some buyers, even a relatively small increase in monthly repayments can mean they have to reduce their budget or step back from a purchase altogether."
"Equally, homeowners coming off fixed-rate deals may face significantly higher repayments, which could affect their decision to move. This makes realistic pricing and good financial preparation more important than ever."
"Buyers and sellers need confidence that the figures work before committing, while greater stability in mortgage pricing would help restore confidence and keep people moving through the housing market."
Advice for borrowers
Sarah Tucker, a mortgage expert at HomeOwners Alliance, said: "Seeing the average five-year mortgage rate hit 6% is a real blow for borrowers, particularly those coming off much cheaper fixed deals who are already facing steep increases in other household bills."
"But while it's important not to panic, it's also important not to just sit and hope that rates will come back down either." She suggested: "If your current mortgage deal ends within the next six months, start looking at your options now."
